Newspaper article St Louis Post-Dispatch (MO)

GM to Boost Fund for Pension with Cash, Firm's Stock

Newspaper article St Louis Post-Dispatch (MO)

GM to Boost Fund for Pension with Cash, Firm's Stock

Article excerpt

A plan whereby General Motors Corp. will contribute $10 billion in cash and company stock to shore up its underfunded pension plan goes into effect today, Labor Secretary Robert Reich announced Sunday.

The plan will protect the benefits of 600,000 hourly workers and retirees of GM, the labor department said.

"In allowing this contribution, the largest ever made to a pension plan, we are asserting broad protections for workers as we improve the funding of their pensions," Reich said.

The department's Pension and Welfare Benefits Administration will formally grant an exemption that allows GM to contribute 173 million shares of class E common stock, worth about $6 billion, to its pension plan. The contributed stock will constitute about 21 percent of the plan's total assets.

The exemption is necessary because federal pension law prohibits a pension plan from holding more than 10 percent of its assets in employer stock.

t GM has already added $4 billion in cash to the pension program, according to a company spokesman. …

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